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How to solve the austerity puzzle at the Europeriphery

The paper to be presented at this event examines the seven key pillars of bail-out programmes of the Europeriphery, namely the issues of internal devaluation, expansionary austerity, growth-enhancing reforms, the frontloaded nature of the adjustment, nominal targeting, the (wrong) values of the fiscal multipliers, and the very concept of conditionality. The paper analyses the crucial role the recession plays in the austerity puzzle at the Europeriphery, e.g. the self-defeating character of fiscal adjustment in an indebted member-state of a monetary union that pushes the economy into a debt trap or/and how such a severe recession has acquired by now the characteristics of hysteresis, namely of a persistent and long-lasting recession.

The paper revives one of the oldest controversies in economics, that of stabilisation vs growth. Within the context and the limitations of an adjustment programme, the paper proposes an innovative policy framework and the analytical tools needed in achieving improved results in terms of both fiscal consolidation and growth performance.

This event will be held under the Chatham House Rule


  • Ioannis Mourmouras, Chief Economic Adviser to the Greek Prime Minister and former Deputy Finance Minister
  • Discussant: Zsolt Darvas, Senior Fellow at Bruegel
  • Chair: Guntram Wolff, Director of Bruegel

Practical details

  • Venue: Bruegel, Rue de la Charité 33, 1210 Brussels
  • Time: Wednesday 13 November 2013, 12:45 - 14:30 (A light lunch will be served before the event)
  • Contact:Matilda Sevón, Events Coordinator - matilda.sevon[at]bruegel.org